New York: Finance Minister P Chidambaram blames the 700-point decline in stock markets on Thursday occurred on “motivated rumours” that the Prime Minister was resigning.
“There is a motivated rumour of the PM resigning in broker circles which brought the markets down. In the morning session the market gained 400 points, in afternoon, there were motivated rumours in the Bombay brokers circle," he said in New York at a function.
The Government did not intent to restrict capital flows but the huge amount of funds coming into the country had necessitated some measures to moderate the flow for a while.
"Foreign investors are liquidating their holdings of securities in their countries and putting that money elsewhere. It has therefore become necessary to take some measures to moderate the flow of funds into India," Chidambaram said in a televised address.
"We have no intention on imposing control on capital flows, nor do we intend to keep out certain kinds of funds."
Chidambaram said that he had asked market regulator, Securities Exchange Board of India (SEBI), to take the opinion of foreign institutional investors before deciding on offshore derivatives.
Sebi had no plan to ban participatory notes but its suggestion to restrict their use was correct. Chidambaram assured investors the Indian market was vibrant and regulations were in place.
"Indian market is one of the best among the emerging markets. The real strength of our market lies in regulation. Sebi has become an enviable regulator," he said.
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